OUTLOOK

How to gear up for just-in-time marketing

By focusing on specific interested shoppers instead of spending lavishly to increase macro-level reach numbers, cross-functional marketing teams zero in on the right consumers at the right time with innovative offers that compel them to buy.

Overview

Philadelphia merchant John Wanamaker’s quip that half of all advertising spending is wasted (but no one knows which half) may contain more truth than he realized. And no more so than in today’s digitally enhanced commerce.

One analysis puts the actual wasted portion at roughly a third of the total annual advertising spending in the United States, or about $112 billion. What’s more, while digital channels allow marketers to target consumers more accurately than ever, they also pose threats to firms that fail to cultivate a deep understanding of the needs and behaviors of target customer groups. One study puts the amount of wasted digital marketing spending caused by fraudulent Internet bots pretending to be consumer traffic at $11.6 billion in 2014. In this case, because advertisers don’t really understand their customers, they end up paying for “eyeballs” that aren’t really there.

More than ever, marketers need to gain greater control over how and where they spend each advertising dollar. However, little evidence exists that companies are overly concerned about marketing ROI.

Accenture believes just-in-time (JIT) marketing can drive out much of this waste by creating tangible links with real customers who are ready and able to buy. The concepts underpinning this approach are adapted from the Japanese manufacturing techniques that now protect many factories from the scourges of inventory and waste.

First, JIT marketers should apply Kanban methods, which ensure that the creation of new marketing is always calibrated to meet actual marketing needs. Second, they should cultivate a mindset of Kaizen, in which the entire organization is continuously improving processes and practices to eliminate waste and enhance quality. And, finally, they should assure the “total quality” of each and every output. These concepts may seem straight-forward, but making them work on a daily basis can be challenging.

LEAN THINKING

In practice, JIT marketing means that companies spend only what’s needed, when it’s needed, introducing a customized message or offer to target consumers in ways that can quickly close a sale. It does away with the expensive “inventories” of surplus effort that mass marketing creates, replacing advertising clutter and promotional waste with effective messages attuned to the needs of interested people exactly when they are in the buying mood. JIT marketing targets distinctive customer segments whose interests span many product categories. It then enlists cross-functional teams of “creatives”—programmers, data scientists and quality assurance specialists—who work together to cut costs and improve the effectiveness of marketing investments.

But shifting your marketing organization to this “lean thinking” mindset isn’t easy, as companies learned a few decades back when Toyota introduced the concept of JIT manufacturing. While many Western companies attempted to replicate Toyota’s success with lean manufacturing, only a few did so effectively. The problem? Most focused on the most visible elements of JIT without understanding its underlying philosophy.

The same thing could happen with JIT marketing, which is why marketing leaders should keep the following ideas in mind.

Focus on pull, not reach. While traditional marketers usually achieve the levels of reach they need to communicate with target customers, the broad methods they use often waste time, effort and money as they try, but fail, to engage millions of disinterested consumers. While the brand-building capabilities of broadcast advertising cannot be ignored, the rising levels of clutter (that is, “inventory”) that it causes in the marketplace dilute its sales effectiveness.

JIT marketing organizations, on the other hand, recognize that “targeted pull” really matters. For example, to zero in on customers already inclined to buy, Delta Air Lines has created a special Facebook app that makes planning and booking group travel easier. The app enables group members to invite others to travel, share trip details and improve their decision-making processes.

To make these kinds of innovations happen on a routine basis, JIT marketing organizations need the agility that only cross-functional teams offer as they craft the messages and experiences that will lure the target consumers to the brand. Doing so makes it unnecessary to broadcast to a wider audience, an effort marketers should reserve strictly for brand-building efforts.

Know when to engage—and where. JIT marketing organizations recognize that in today’s digital world, broadcast media represent just one of many options for communicating with customers. That’s why they seek and engage customers wherever relevant opportunities occur. Instead of relying on superficial metrics like the number of Facebook “likes” or online click-through rates, which are often poor substitutes for actively engaging customers, they constantly invent new ways to influence their target audiences.

One example of this kind of engagement is Amazon’s purchase of Goodreads, a social network for avid readers. The acquisition gives Amazon, the world’s largest bookseller, a knowledgeable, disinterested source of recommendations that it can integrate with its powerful personalized recommendation algorithms to provide shoppers with a customized list of books they could be legitimately interested in buying.

Invest in “interactions,” not campaigns. Traditional marketing departments usually focus on the macro-level results of their advertising and promotional campaigns (for example, reach, sales conversions or focus group reactions) without considering all of the attendant waste. In contrast, a JIT marketing organization recognizes that marketing succeeds at a much more up-close and personal distance—one that involves individual customer interactions. Gilt, an online shopping portal with millions of members, has gone to considerable lengths to personalize its marketing messages. The company’s website enables members to highlight their favorite brands and then sends personalized notifications whenever those brands go on sale. Each day, in an integral part of the company’s marketing strategy, Gilt sends more than 2,500 versions of these personalized emails to users.
A successful interaction strategy requires companies to achieve total quality across their marketing, sales and service functions. To invest every interaction with the quality it needs, JIT marketers focus their spending priorities on improving today’s customer experience, and recognizing its outsized impact on sales, loyalty and word-of-mouth recommendations.

Unite and align marketing activities. Many firms structure their marketing departments around discrete core activities with different objectives: advertising generates reach, promotion converts sales, and research underpins the design of long-term marketing campaigns. Compare that to a typical JIT marketing organization, where all of these activities are inseparable. Cross-functional teams continually calibrate both the extent of advertising reach and the content of promotional messaging based on real-time insights, aligning them to improve quality and head off wasteful spending.

While the brand-building capabilities of broadcast advertising cannot be ignored, the rising levels of clutter (that is, 'inventory') that it causes in the marketplace dilute its sales effectiveness.

A leading drugstore chain wanted to improve the effectiveness and efficiency of its promotions by offering its marketers easier and more timely access to detailed market insights. The information enabled staffers to fine-tune promotions, drive greater sales within existing customer segments and even create useful new micro-segments. This data-sharing plan encouraged experimentation, and teams could rapidly adjust promotions to get the most out of every marketing dollar they spent. In addition to boosting sales, the program ultimately delivered significant marketing efficiency gains.

Make continuous improvements automatic. All companies want to deliver the right message or offer to the right customer at the right moment through the right channel. But JIT marketing organizations do more than aspire to this mindset—they use data, analytics and multi-channel customer experience to refine their understanding of customer preferences continually and automatically. Hertz, the global car rental company, tirelessly updates its understanding of customer behavior and uses this information across multiple channels in ways that convince consumers to choose personalized offerings, which often carry higher prices. The organization has honed the analytics capabilities behind this process, enabling it to tap into the customer’s willingness to take specific offers, and understand why he or she refuses others.

Just-in-time marketing offers companies a new way to cut through the noise while paring costs and boosting the effectiveness of every dollar they spend. By focusing on specific interested shoppers instead of spending lavishly to increase macro-level reach numbers, cross-functional teams zero in on the right consumers at the right time with innovative offers that compel them to buy. Companies currently embracing JIT marketing are pioneering an approach that will be every bit as ground shaking in the marketing sphere as JIT production has been for manufacturing.

SIDEBAR: SOMEWHERE SOUTH OF ROI

In the 90-odd years since Edward Jordan penned what many consider the first image advertisement—“Somewhere West of Laramie,” for his Jordan Motor Car Co.—companies have wasted billions annually attempting to persuade customers to buy their products. A big part of the problem is a lack of quantification.

A 2014 survey of chief marketing officers by cmosurvey.org reveals that only a third of CMO projects employ any kind of analytics. More surprising, two-thirds of respondents said that they do not attempt to quantitatively prove the long-term impact of their marketing spending. It gets worse: Only 15 percent of firms were capable of tabulating the impact social media had on their business performance.

In addition, a survey in Advertising Age reported that in 2012, nearly 60 percent of CMOs did not use standard return on investment measures to establish their budgets. What’s more, 68 percent of respondents reported basing their budgets on historical spending levels, 28 percent used “gut instinct” and 7 percent didn’t use any metrics at all.

is the Global Managing Director at the Accenture Institute for High Performance. He is the author of Big Bang Disruption: Strategy in the Age of Devastating Innovation and Jumping the S-Curve. Nunes is based in Boston.

Joshua Bellin

is a research fellow at the Accenture Institute for High Performance. Bellin is based in Boston.

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